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The Indian Government has hiked the excise duty on petrol and diesel by Rs 3 each today. The steep excise duty hike is expected to add Rs 39,000 crore additional revenue to the govt. coffers. Retail prices of petrol and diesel will not be impacted by the new tax changes as the state-owned oil firms would absorb this increase in price thereby adjusting it against the recent fall in oil prices.
According to a notification issued by the Central Board of Indirect Taxes and Customs, special excise duty on petrol was hiked by Rs 2 to Rs 8 per litre and Rs 4 a litre from Rs 2 in case of diesel. The government has also increased the road cess by Rs 1 per litre on petrol and diesel to Rs 10. With the hikes, the total excise duty on petrol will rise to Rs 22.98 per litre and that on diesel reaches Rs 18.83. Petrol and diesel prices are fluctuating on a daily basis due to the International oil rate instability caused by the on-going oil price war between Russia and Saudi Arabia. Earlier, petrol and diesel prices were cut by 13 paise and 16 paise respectively as the oil companies adjusted the excise duty hike against the international drop in oil prices.
Petrol now costs Rs 69.87 a litre in Delhi while a litre of diesel will set you back by Rs 62.58. The central government has taken the step of increasing the hike in order to raise revenue to maintain the govt. fiscal deficit. The additional revenues generated would help the government to raise funds needed for social expenditure, infrastructure push among others. International crude prices right now hover around USD 32 per barrel and it could spiral downwards if the price war intensifies further. Indian oil prices are going to further decrease if the international price keeps decreasing.